BULLETIN: Now, A ‘Royalty Units’ Scam Pushed By Recidivist Senior Citizen And His Children And Involving Purported $11 Billion Gold Mine At 2 Ohio Gravel Pits, SEC Charges; ‘Flat Out Lies,’ Agency Says Of Claims Surrounding 3 Eagles Research & Development LLC

BULLETIN: The SEC has gone to federal court in Portland, Ore., alleging that a company led by a recidivist huckster and operating in the state sold investors into a “royalty units” scam involving a purported $11 billion gold mine in Ohio and the promise of “whopping returns.”

Charged in the alleged caper were Harry Dean Proudfoot III, 72, of Mt. Vernon, Ohio; Matthew Dale Proudfoot, 43, of Colbert, Wash.; and Laurie Anne Vrvilo, 46, of Tigard, Ore. Matthew is Proudfoot’s son; Laurie is Proudfoot’s daughter, the SEC said. Their company is known as 3 Eagles Research & Development LLC.

The company also was charged, as was Dennis Ashley Bukantis, 70, of Denver, amid allegations he helped raise money for the outrageous scheme that allegedly raised $2.7 million from about 140 investors in 23 states.

Investors’ money “was actually spent on family cars, jewelry, vacations, and vitamin supplements,” the SEC said.

“The Proudfoots and 3 Eagles falsely represented that gold mining production would begin in late 2010 and generate approximately $1.6 million in gross monthly revenues, as well as regular royalty payments,” the SEC charged in the complaint. “These representations, among others, were flat out lies.

“Rather than using investor funds for gold mining equipment and operations, Harry, Matthew and Laurie misappropriated approximately $1.1 million of the investor funds to pay for, among other things, medical expenses, vitamin supplements, vacations, school tuition and jewelry,” the SEC continued. “Harry, Matthew and Laurie also dissipated much of the remaining investor funds for other expenses such as automobile costs, telephone expenses, travel, meals and entertainment, plus nearly two hundred thousand dollars in legal fees. By September 2011, all but approximately $38,000 of the money raised from investors was spent, without the purchase and installation of mining equipment at the Ohio project site and without the commencement of gold mining operations.”

The scheme, the SEC charged, shifted forms after Harry Proudfoot was served investigative subpoenas from the agency and state securities regulators in the fall of 2011.

While under investigation, Proudfoot resigned from 3 Eagles and “and 3 Eagles represented that it stopped selling royalty units,” the SEC charged.

But by December 2011, the “royalty units” were being sold as “membership interests” by Matthew Proudfoot, the SEC charged.

“Matthew represented to investors that the money would be used to move the Ohio mining project into production, among other things,” the SEC charged. “Once again, much of the investor money was misappropriated, going towards Matthew’s bankruptcy payments and household bills, payments to Laurie and her husband and, most of all, for retainers for separate legal counsel for 3 Eagles, Matthew, Laurie and a sibling.”

Harry Proudfoot also had a bankruptcy, and neither his bankruptcy nor his son’s was disclosed to investors, the SEC charged.

After the issuance of the subpoenas, Matthew Proudfoot sold “membership interests” totaling $400,000 to two Illinois investors, the SEC charged.

But instead of using all the money to develop the purported mine, Matthew “used approximately $200,000 of the $400,000 on attorney fees for 3 Eagles, Matthew, Laurie and another sibling in connection with the Commission’s investigation.”

Laurie, meanwhile, assisted her brother in pulling off the scam, the SEC charged.

“Laurie actively engaged with Matthew in a scheme to conceal the use of these investor funds,” the SEC charged. “She received personal checks and cashier’s checks from Matthew and deposited these into her personal bank account. Laurie also received bank wires from Matthew into her same personal bank account. Laurie then promptly transferred funds from her personal bank account into a bank account she had newly opened for 3 Eagles. With those funds, Laurie had the bank issue wires to the various law firms as their retainers.”

The SEC complaint alleges that Harry Proudfoot was a recidivist securities huckster named in prior actions in Alaska (1991/case details unclear) and Oregon (between 1993 and 2011/insurance, automated teller machines and unrelated gold-mining scheme in Canada).

“3 Eagles did not even have rights to much of the [Ohio] property it claimed to be mining for gold, and the Proudfoots instead diverted investor money for personal use rather than the mining activities outlined in presentations to investors,” the SEC charged, alleging that investors were told “they could earn 35 times their initial investment.”

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One Response to “BULLETIN: Now, A ‘Royalty Units’ Scam Pushed By Recidivist Senior Citizen And His Children And Involving Purported $11 Billion Gold Mine At 2 Ohio Gravel Pits, SEC Charges; ‘Flat Out Lies,’ Agency Says Of Claims Surrounding 3 Eagles Research & Development LLC”

  1. Any more info on this deal? I am a small investor :( and supposedly it has been taken over and close to producing….not believing the 35x but hopeful for getting my original investment back.

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